Europe’s top banks use Ireland to pay just 2% corporate tax, new report claims

Some 16 of the continent’s biggest banks are paying no more than six per cent, while three institutions - Barclays, RBS and Crédit Agricole - are handing over as little as two per cent

By Michael Doyle

27th March 2017, 5:44 pm

Updated: 27th March 2017, 5:44 pm

EUROPE’s top banks are exploiting a legal loophole in Ireland to pay corporation tax as low as 2 PER CENT, it emerged today.

Some 16 of the continent’s biggest banks are paying no more than six per cent, while three institutions - Barclays, RBS and Crédit Agricole - are handing over as little as two per cent, according to a new report from OXFAM.

The study, entitled Opening the Vaults, found that a disproportionate amount of profits of the top European banks are reported in Ireland, with these banks in 2015 making more than €2.3 billion in profits here on a turnover of €3 billion.

The 76 per cent profitability is four times higher than the global average - second only to the Cayman Islands.

The report also finds that just the Cayman Islands, Curacao and Luxembourg having a higher average profit per employee.

Oxfam Ireland’s Senior Policy and Research Coordinator Michael McCarthy Flynn said: “The massive profitability levels of European banks in Ireland suggests that large profits may be reported in Ireland as a tax avoidance strategy.

He said: “The background to this is that the banks were previously able to write off losses against their overall tax liability, which resulted in them paying a very low tax rate.

“Now that they’ve returned to profitability they’re continuing to avail of this loophole to pay next to nothing in corporation tax.

“It’s an absolute scandal because we have paid billions to bail out these banks and this is money which could be used to solve the homeless crisis or to sort out the health system.

“This loophole needs to be closed and a minimum effective tax rate brought in to ensure they pay what they should be paying.”

In the 2015 budget, Mr Noonan announced the abolition of the “double Irish”. That practice involved a multinational setting up two companies in Ireland. One is incorporated and tax resident here and the other is incorporated in Ireland but tax resident elsewhere.